VNL formation of project management joint venture

RNS
1 March 2010

VinaLand Limited

Formation of project management joint venture

Ho Chi Minh City - VinaLand Limited ("the Company" or "VNL"), the AIM-quoted investment vehicle established to target key growth segments within Vietnam's emerging real estate market, is pleased to announce the Board of Directors of the Company has approved the key terms of a proposal concerning the establishment of the VinaProjects joint venture, to bring world-class project and construction management expertise to Vietnam.

VinaProjects is a joint venture between the Company's Investment Manager, VinaCapital Group, and Hong Kong-based InProjects Group, the leading independent project management company in Asia, specialising in large-scale hospitality, leisure and retail projects. The purpose of the venture is to ensure the availability of experienced project managers to deliver world-class real estate projects on behalf of the Investment Manager. Securing international-standard project and construction managers has been a key challenge for the Investment Manager.

The Company's chairman Mr. Horst Geicke states: "The VinaProjects agreement is a very important step forward as we move to the construction phase on many of our assets, particularly residential and mixed-use developments that, in many cases, are destined to become leading urban landmarks in Vietnam's cities. We look forward to working with VinaProjects to bring these projects to fruition."

Joint venture establishment After a competitive tender and evaluation process, InProjects was accepted as partner for the joint venture, and Mr. Paul James, an Englishman with Heathrow T5 and Macau integrated resort experience, was appointed to run the business.

VinaProjects is now in full operation and has tendered and won several project contracts on a competitive basis. The joint venture has three divisions - project management, urban planning, and facilities management. Going forward, VinaProjects will be handling project and construction management for most if not all of the projects under development that are owned by VinaCapital-managed funds.

Fee arrangement with VOF and VNL
VNL and VinaCapital Vietnam Opportunity Fund Ltd (VOF) and VinaCapital's VinaLand Limited ("VNL") will pay fees to VinaProjects for services rendered. In accordance with the AIM Rules, the fee arrangement between VOF and VinaProjects must be disclosed as a Rule 13 related party transaction. The independent directors of VOF, having consulted with the Company's nominated adviser, consider that the terms of the arrangement between VOF and VinaProjects are fair and reasonable insofar as VOF's shareholders are concerned.

Salient points in the arrangement include the following:
1. The arrangement provides VinaProjects with exclusivity to project manage and develop all projects where VOF and VNL together hold a majority stake. For other projects, VinaProjects will tender along with other suppliers.

2. Fees will be established annually and a review of the business plan will be undertaken annually to ensure that VNL is receiving a superior service at fee scales not more than other equivalent providers in Vietnam. A benchmarking analysis based on recent competitive tenders and awarded contracts will be performed to ensure fees within a guideline range.

3. VinaCapital will maintain appropriate controls to ensure value-for-money in service provision for projects where VinaProjects is the exclusive supplier, including formal benchmarking of cost levels, verification of billing, timekeeping and expenses, and review and testing of controls by the internal auditors.

4. An independent evaluation of the fee arrangements will be conducted by an independent quantity surveyor on an annual basis.

It is projected that overall future project development costs will be constant or lower due to this arrangement and that revenues attributable to the joint venture will not be material in relation to the fund management revenues of the Investment Manager. In the event that material changes occur with respect to fee arrangements in the future, further disclosures may be required under Rule 13.

Notes to Editors: VinaCapital Group is a leading asset management, investment banking and real estate consulting firm with unrivalled experience in the Vietnamese market. VinaCapital Group was founded in 2003 and has grown from a single USD10 million fund to a diversified investment firm with over USD1.7 billion in assets under management as of December 2009.